I know I am late to the conversation with this one, but Josh Kopelman has a great post discussing the differences in various business models in today’s flow of entrepreneurship.

Josh takes a look at the models that social networking sites like LinkedIn, MySpace, and YouTube are built upon. He breaks this down into two categories: “Catch and Keep” vs “Catch and Release”. Describing them, he notes:

But what all of the most successful social networks have in common is that they’ve perfected what I like to call a “catch and keep” model. From the first time a user signs up for a MySpace, or a Facebook, they find themselves sucked into spending hours on the site, and feel compelled to both return on a regular basis, and drag their friends into their network. As recent data demonstrates, the top social networks are among the highest trafficked and stickiest sites on the web.

In sharp contrast, most social networks out there have what I call a “catch and release” model. They can generate buzz, get written up in the blogosphere, and even get 53,651 beta testers, but few of those initial users ever return to the site.

Source: “Redeye VC: “Catch and Release” Business Models”

What I find most intriguing about this, however, is not the math but the focus on the user throughout the cases studied. The empirical means of looking at this data is driven by the User Acquisition Costs. The social means of looking at this is driven by the user’s needs.

As Josh notes, the problem often with these Catch and Release models is that they put together a series of features and functions that impose on the user a suite of actions that are potentially uninteresting, unusable, or unimportant. There are a number of reasons that seem to drive this type of situation:

• Undifferentiated Advice - Many startups base their foundations on an initial itch they have. The excitement about that specific problem often leads to a myopic view of the landscape they are preparing to bridge. Without a variety in voice at the planning table, there is the all-to-easy trap of defining a problem space too narrowly.
• Business-First Mentality - Many companies choose to deal with their business model motivations first and foremost. In this case, you’ll often see a company trying to leverage an untapped opportunity - but they can only look at how to funnel people towards the opportunity. Unfortunately, people don’t like being funneled and they know when they are in one.
• Shifted Goals - Startup life is filled with rapid changes - it’s part of the excitement. At the same time, it often feels difficult, if not impossible, to make changes. Of all the entrepreneurs I’ve ever spoken to, most have one of these moments in the history of their company and almost all have some regret the didn’t “set things right” when they knew it was the time to do it.

If there’s a recurring theme here, it’s surely that a focus on your customer’s needs is tantamount to your success. It’s an obvious truth that’s often difficult to stay true to.

Technorati Tags: business+models, josh+kopelman, social networking, social+networking, trends

The last couple of weeks has shown us, once again, that while it’s cool to be an edgeling, there is quite a bit of risk associated with that particular lifestyle. The challenge, of course, is future-proofing your home when you haven’t bothered to fully compact the foundation. Consider a couple of examples.

Google MyMaps
Last week, I think it was, Google released their own little personalized map mashup service called MyMaps. As many in the blogosphere noted, this was a terrible signal for the many companies that built their business around the Google Maps API. Om Malik notes:

Some use the Google Maps API as an underpinning for their offering. They now face the prospect of competing with Google, which also controls the API. However, a quick review of Google’s new service gives upstarts an edge on user friendliness, even though on their blog, Google claims even caveman can do it.

Google’s announcement shows that social mapping and geo-tagging are now a big enough opportunity for the company to take seriously. It also points to a larger trend – location-based services and how they are increasingly becoming part of information aggregation and sorting technologies.

Source: GigaOm, “Google MyMaps Smashes Mash-ups”

Many predicted that loads of startups would be forced off the ship now that Google had entered the game. I think there’s some truth to that, but not because Google is unbeatable. The problem is that Google owns the API and hasn’t fully fleshed out what happens to users of that API as their usage infringes on Google’s bottom line. If there’s any reason it’s not true it’s tied to the perpetually scrappy nature of startups and their founders - why would you quit if you don’t physically have to?

Photobucket
Today, Photobucket posted somewhat surprising news that MySpace had now decided to block media from their domain:

Today MySpace made the decision to prevent Photobucket users from posting their videos and remixes to their MySpace pages.

This action by MySpace means that all of the videos and remixes you created will no longer show up on your MySpace profile, blog and comments section. More specifically, if you attempt to add new videos or remixes to your profile, they will be removed.

Source: Photobucket Blog, “Breaking news: Posting from Photobucket to MySpace”

I’m sure this doesn’t come as a surprise to anyone at Photobucket, though it’s always nice to play it off as one. Photobucket definitely is eating at some of the intrinsic value MySpace wants to hold on to for itself. The same can be said for YouTube. The reality is that services like Photobucket and YouTube helped make MySpace what it is today and there’s undoubtedly a bit of saltiness.

The real question for Photobucket is what happens if they are indeed banned from MySpace (note: as of last check it was still working). I think that Photobucket is indeed well entrenched however, they are the poster child for startups you never heard of, so that could be problematic. YouTube, for example, has generated the required escape velocity and no longer has to worry about its identity.

Unfortunately, I don’t think there’s much option to the world as it stands today. Entrepreneurs will pour themselves into every unfilled crack they see in the landscape. Most won’t make it out alive but most all will learn something useful for the future. I know I certainly learned something the last time I got slammed into the wall.

Technorati Tags: google, mymaps, myspace, web2.0

Peter Rip has an interesting post up today that talks about the changing landscape of what is generally called Web 2.0:

Much of the “easy” innovation seems to have been wrung out of the Web 2.0 wave. Web 2.0 was cheap - thanks to open source, simple - thanks to RSS/REST, and distinctive - thanks to AJAX and Flash. It helped more than a little the Google has continued to entice us all with the abundant profits in Internet advertising.

Now the hard work begins, again. The next wave of innovation isn’t going to be as easy. The hard problems in the WWW are no longer usability or ease of everyday content creation. These problems are solved. Digital cameras, SixApart, WordPress, and digital video cameras showed us how ease it could be. Now the hard part is moving from Web-as-Digital-Printing-Press to true Web-as-Platform. To make the Web a platform there has to a level of of content and services interoperability that really doesn’t exist today.

Source: EarlyStageVC, “Web 2.0 - Over and Out”

As Peter notes, there has been an interesting dip in the level of activity surrounding the beacons of the Web 2.0 world. More importantly, perhaps, is that a “template” has emerged for the Web 2.0 company:

• Users can share any kind of information from files to photos
• Storage isn’t expensive, so we don’t police it today, yet
• Users can invite their friends; that’s how we get new users
• We launched a few months ago and are doubling every month
• We haven’t quite figured out our revenue model, but we think it is freemium (“Let me explain what that means…”)

If our experiences at Blue Whale Labs are any indication, the level of sophistication is definitely on the rise - and we’re pretty excited about that. There are a couple of reasons why this excites us:

First, I never believed the hype that software had devolved into a commodity state. While there are the rare stories like Digg, the reality is that most software projects STILL fail and that they often cost significantly more than a few bucks to get off the ground. If anything, it’s the propagation of the myth that anything can be built for free that’s led to the micro-slicing of verticals we see inside the Internet domain.

Second, we love the challenge. As applications and systems grow more and more complex, the beautiful dance that is application design gets more and more interesting. The ultimate challenge, of course, is leveraging all this new knowledge while bringing forward better usability and simplicity. The user still comes first and that’s not a trend we foresee going anywhere (it never should have gotten away from us quite frankly).

Third, the pace is still hectic but the expectations are getting more realistic. One thing we stress with our clients is releasing “the right set of features” as opposed to simply launching for the sake of launching. This is recently echoed at Ask the Wizard:

The bottom line being that you want to invest pre-launch such that you optimize for innovation post-launch. This is never more true than when it seems like you are racing into a market with multiple competitors and your inclination is to hurry up and launch something! The advantage you have prior to launch is that you don’t yet have customer demands. Set yourself up to be in a position to rapidly iterate and innovate post-launch and you will be in the best position to put the first movers back on their heels if they aren’t in a position to react to market forces as quickly as you.

Source: Ask the Wizard, “Launch Late to Launch Often”

Great advice for sure.

Technorati Tags: bluewhalelabs, greg narain, reputation, trends, web2.0

Don Norman, as in the Nielson-Norman Group, has a truly interesting piece on the end of simplicity. He ponders about our perceived obsession with simplicity, despite the trend in the other direction.

Because the people want the features.

Because simplicity is a myth whose time has past, if it ever existed.Make it simple and people won’t buy. Given a choice, they will take the item that does more. Features win over simplicity, even when people realize that it is accompanied by more complexity. You do it too, I bet. Haven’t you ever compared two products side by side, comparing the features of each, preferring the one that did more? Why shame on you, you are behaving, well, behaving like a normal person.

Don Norman’s jnd.org / Simplicity Is Highly Overrated

The ultimate conclusion is that marketing wins in the end, as it rightly should.  The simple fact is that people make choices based on the features that are available - we’d be remiss to pay more for less, especially when our pocketbooks are opened.

This line of thinking is most interesting as it seems in stark contrast with the current trends in software design.  While there are no shortage of sites lauding the Less Is More Mantra, it is somewhat refreshing to still know we’re not all crazy for wanting just a little bit more.

technorati tags:don+norman, simplicity, design

Tomorrow I will be joining a wide cross-section of the web development community at the Web Guild 2006 Annual Conference - Web 2.0, The New Web. I’m going to borrow some verbiage from Brian Solis:

This event is targeted at web professionals, such as usability & design engineers, internet marketing professionals (SEO and SEM), web application developers and internet entrepreneurs, as well as anyone that creates applications or services for users. From my conversation with the WebGuild, registered attendees include CxO, VPs, and Directors of Engineering and Marketing from Google, Yahoo, Cisco, AOL and more. There will also be VCs from Intel, Sequoia, Mayfield, Storm, Shasta, among others.

Source: PR 2.0, “This Thursday, WebGuild’s Annual Conference – Web 2.0, The New Web”

I’m most excited in all the coverage they will be having as relates to usability and user experience, two of the more interesting catalysts of the Web 2.0 environment. Om’s moderating a panel on just this topic.

If you would like to attend the event, there’s a special $40 discount I can hook you up with. Use code WGDY6 to get your discount here.